UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-Q





(Mark
One)


x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF
      THE SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period ended June 30,
2010





OR





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF
      THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from __________ to
__________





Commission
File No. 1-34155




First
      Savings Financial Group, Inc.(Exact
      name of registrant as specified in its charter)





Indiana
            
            37-1567871(State
      or other jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Identification
      Number)




501 East Lewis &
      Clark Parkway, Indiana 47129(Address
      of principal executive offices) (Zip
Code)




Registrant's
      telephone number, including area code 1-812-283-0724Not
      applicable(Former
      name, former address and former fiscal year, if changed since last
      report)


Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes x   No
o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).  Yes o  No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check
one):





Large
      Accelerated Filer o
            Accelerated
      Filer oNon-accelerated
      Filer o
            Smaller
      Reporting Company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   Yes o  No x





The
number of shares outstanding of the registrant’s common stock as of July 31,
2010 was 2,414,940.











FIRST
SAVINGS FINANCIAL GROUP, INC.





INDEX





Part
      I Financial
      Information
            
            PageItem
      1.  Financial StatementsConsolidated
      Balance Sheets as of June 30, 2010 and September 30, 2009
      (unaudited)
            
            3Consolidated
      Statements of Income for the three months and nine months ended June 30,
      2010 and 2009 (unaudited)
            
            4Consolidated
      Statements of Cash Flows for the nine months ended June 30, 2010 and 2009
      (unaudited)
            
            5Notes
      to Consolidated Financial Statements (unaudited)
            
            6-18Item
      2.  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
            
            19-26Item 3.  Quantitative
      and Qualitative Disclosures About Market Risk
            
            27-28Item 4.  Controls and
      Procedures
            
            29Part
      II Other
      InformationItem 1.  Legal
      Proceedings
            
            30Item 1A.  Risk
      Factors
            
            30Item 2.  Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            31Item 3.  Defaults
      Upon Senior Securities
            
            31Item
      4.  Reserved
            
            31Item 5.  Other
      Information
            
            31Item
      6.  Exhibits
            
            31Signatures
            
            
            
            32


-2-





June
      30,
            
            
            September
      30,(In
      thousands, except share and per share data)
            
            2010
            
            
            2009ASSETSCash
      and due from banks
            
            $
            7,112
            
            
            $
            8,359Interest-bearing
      deposits with banks
            
            
            3,380
            
            
            
            2,045Total
      cash and cash equivalents
            
            
            10,492
            
            
            
            10,404Securities
      available for sale, at fair value
            
            
            103,969
            
            
            
            72,580Securities
      held to maturity
            
            
            4,294
            
            
            
            6,782Loans
      held for sale
            
            
            470
            
            
            
            317Loans,
      net
            
            
            343,811
            
            
            
            353,823Federal
      Home Loan Bank stock, at cost
            
            
            4,170
            
            
            
            4,170Premises
      and equipment
            
            
            9,524
            
            
            
            9,916Foreclosed
      real estate
            
            
            1,198
            
            
            
            1,589Accrued
      interest receivable:Loans
            
            
            1,713
            
            
            
            1,607Securities
            
            
            767
            
            
            
            493Cash
      surrender value of life insurance
            
            
            8,306
            
            
            
            3,931Goodwill
            
            
            5,940
            
            
            
            5,882Core
      deposit intangible
            
            
            2,521
            
            
            
            2,741Other
      assets
            
            
            4,315
            
            
            
            6,576Total
    Assets
            
            $
            501,490
            
            
            $
            480,811LIABILITIESDeposits:Noninterest-bearing
            
            $
            26,587
            
            
            $
            25,388Interest-bearing
            
            
            338,011
            
            
            
            325,428Total
      deposits
            
            
            364,598
            
            
            
            350,816Federal
      funds purchased
            
            
            -
            
            
            
            1,180Repurchase
      agreements
            
            
            16,925
            
            
            
            17,239Borrowings
      from Federal Home Loan Bank
            
            
            64,050
            
            
            
            55,773Accrued
      interest payable
            
            
            461
            
            
            
            516Advance
      payments by borrowers for taxes and insurance
            
            
            168
            
            
            
            341Accrued
      expenses and other liabilities
            
            
            1,727
            
            
            
            2,069Total
      Liabilities
            
            
            447,929
            
            
            
            427,934STOCKHOLDERS'
      EQUITYPreferred
      stock of $.01 par value per share Authorized 1,000,000 shares;
      none issued
            
            
            -
            
            
            
            -Common
      stock of $.01 par value per share Authorized
      20,000,000 shares; issued 2,542,042 shares
            
            
            25
            
            
            
            25Additional
      paid-in capital
            
            
            24,259
            
            
            
            24,263Retained
      earnings - substantially restricted
            
            
            31,352
            
            
            
            29,453Accumulated
      other comprehensive income
            
            
            2,105
            
            
            
            932Unearned
      ESOP shares
            
            
            (1,537
            )
            
            
            (1,796
            )Unearned
      stock compensation
            
            
            (1,314
            )
            
            
            -Less
      treasury stock, at cost - 127,102 shares
            
            
            (1,329
            )
            
            
            -Total
      Stockholders' Equity
            
            
            53,561
            
            
            
            52,877Total Liabilities and
      Stockholders' Equity
            
            $
            501,490
            
            
            $
            480,811





See notes
to consolidated financial statements.




-3-




PART
I - FINANCIAL INFORMATION


FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF INCOME


(Unaudited)




Three
      Months
              Ended
      June 30
            
            
            Nine
      Months
              Ended
      June 30(In
      thousands, except share and per share data)
            
            2010
            
            
            2009
            
            
            2010
            
            
            2009INTEREST
      INCOMELoans,
      including fees
            
            $
            5,575
            
            
            $
            2,835
            
            
            $
            16,782
            
            
            $
            8,454Securities:Taxable
            
            
            742
            
            
            
            379
            
            
            
            2,384
            
            
            
            969Tax-exempt
            
            
            193
            
            
            
            45
            
            
            
            424
            
            
            
            96Dividend
      income
            
            
            27
            
            
            
            1
            
            
            
            59
            
            
            
            30Interest-bearing
      deposits with banks
            
            
            4
            
            
            
            12
            
            
            
            13
            
            
            
            27Total
      interest income
            
            
            6,541
            
            
            
            3,272
            
            
            
            19,662
            
            
            
            9,576INTEREST
      EXPENSEDeposits
            
            
            1,125
            
            
            
            981
            
            
            
            3,674
            
            
            
            3,196Repurchase
      agreements
            
            
            83
            
            
            
            -
            
            
            
            255
            
            
            
            -Borrowings
      from Federal Home Loan Bank
            
            
            267
            
            
            
            79
            
            
            
            724
            
            
            
            229Total
      interest expense
            
            
            1,475
            
            
            
            1,060
            
            
            
            4,653
            
            
            
            3,425Net
      interest income
            
            
            5,066
            
            
            
            2,212
            
            
            
            15,009
            
            
            
            6,151Provision
      for loan losses
            
            
            300
            
            
            
            272
            
            
            
            1,246
            
            
            
            400Net
      interest income after provision for loan losses
            
            
            4,766
            
            
            
            1,940
            
            
            
            13,763
            
            
            
            5,751NONINTEREST
      INCOMEService
      charges on deposit accounts
            
            
            405
            
            
            
            150
            
            
            
            1,184
            
            
            
            427Net
      gain on sales of securities available for sale
            
            
            34
            
            
            
            -
            
            
            
            34
            
            
            
            -Net
      gain on sales of mortgage loans
            
            
            29
            
            
            
            12
            
            
            
            72
            
            
            
            24Increase
      in cash surrender value of life insurance
            
            
            64
            
            
            
            46
            
            
            
            174
            
            
            
            139Commission
      income
            
            
            55
            
            
            
            -
            
            
            
            125
            
            
            
            -Other
      income
            
            
            152
            
            
            
            83
            
            
            
            412
            
            
            
            236Total
      noninterest income
            
            
            739
            
            
            
            291
            
            
            
            2,001
            
            
            
            826NONINTEREST
      EXPENSECompensation
      and benefits
            
            
            2,638
            
            
            
            915
            
            
            
            6,654
            
            
            
            2,779Occupancy
      and equipment
            
            
            554
            
            
            
            206
            
            
            
            1,638
            
            
            
            669Data
      processing
            
            
            530
            
            
            
            170
            
            
            
            1,263
            
            
            
            477Advertising
            
            
            81
            
            
            
            30
            
            
            
            242
            
            
            
            128Professional
      fees
            
            
            216
            
            
            
            144
            
            
            
            540
            
            
            
            330FDIC
      insurance premiums
            
            
            177
            
            
            
            204
            
            
            
            459
            
            
            
            220Charitable
      contributions
            
            
            6
            
            
            
            4
            
            
            
            14
            
            
            
            1,210Net
      loss on foreclosed real estate
            
            
            8
            
            
            
            28
            
            
            
            25
            
            
            
            64Other
      operating expenses
            
            
            712
            
            
            
            379
            
            
            
            2,095
            
            
            
            1,254Total
      noninterest expense
            
            
            4,922
            
            
            
            2,080
            
            
            
            12,930
            
            
            
            7,131Income
      (loss) before income taxes
            
            
            583
            
            
            
            151
            
            
            
            2,834
            
            
            
            (554
            )Income
      tax expense (benefit)
            
            
            83
            
            
            
            (2
            )
            
            
            742
            
            
            
            (342
            )Net Income
      (Loss)
            
            $
            500
            
            
            $
            153
            
            
            $
            2,092
            
            
            $
            (212
            )OTHER
      COMPREHENSIVE INCOME, NET OF TAXUnrealized
      gain on securities:Unrealized
      holding gains arising during the period
            
            
            731
            
            
            
            43
            
            
            
            1,622
            
            
            
            199Less:
      reclassification adjustment
            
            
            (21
            )
            
            
            -
            
            
            
            (21
            )
            
            
            -Unrealized
      gain on securities
            
            
            710
            
            
            
            43
            
            
            
            1,601
            
            
            
            199Reclassification
      adjustment - net realized losson
      settlement of pension plan
            
            
            (428
            )
            
            
            -
            
            
            
            (428
            )
            
            
            -Other
      comprehensive income
            
            
            282
            
            
            
            43
            
            
            
            1,173
            
            
            
            199Comprehensive
      Income (Loss)
            
            $
            782
            
            
            $
            196
            
            
            $
            3,265
            
            
            $
            (13
            )Net Income (Loss) per common
      share, basic
            
            $
            0.23
            
            
            $
            0.06
            
            
            $
            0.92
            
            
            $
            (0.09
            )Net Income (Loss) per common
      share, diluted
            
            $
            0.23
            
            
            $
            0.06
            
            
            $
            0.92
            
            
            $
            (0.09
            )Dividends per common
      share
            
            $
            -
            
            
            $
            -
            
            
            $
            0.08
            
            
            $
            -




See notes
to consolidated financial statements.





-4-




PART
I - FINANCIAL INFORMATION


FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)





Nine
      Months EndedJune
      30,(In
      thousands)
            
            2010
            
            
            2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income (loss)
            
            $
            2,092
            
            
            $
            (212
            )Adjustments
      to reconcile net income (loss) to net cash providedby
      operating activities:Provision
      for loan losses
            
            
            1,246
            
            
            
            400Depreciation
      and amortization
            
            
            870
            
            
            
            232Amortization
      of premiums and accretion of discountson
      securities, net
            
            
            77
            
            
            
            155Mortgage
      loans originated for sale
            
            
            (7,439
            )
            
            
            (2,181
            )Proceeds
      on sale of mortgage loans
            
            
            7,353
            
            
            
            2,054Gain
      on sale of mortgage loans
            
            
            (72
            )
            
            
            (24
            )Net
      realized and unrealized (gain) loss on foreclosed real
    estate
            
            
            (113
            )
            
            
            2Net
      gain on sales of securities available for sale
            
            
            (34
            )
            
            
            -Increase
      in cash value of life insurance
            
            
            (174
            )
            
            
            (139
            )Deferred
      income taxes
            
            
            96
            
            
            
            (503
            )ESOP
      compensation expense
            
            
            280
            
            
            
            192Stock
      compensation expense
            
            
            53
            
            
            
            -Contribution
      of common stock to charitable foundation
            
            
            -
            
            
            
            1,100Increase
      in accrued interest receivable
            
            
            (380
            )
            
            
            (126
            )Decrease
      in accrued interest payable
            
            
            (55
            )
            
            
            (14
            )Change
      in other assets and liabilities, net
            
            
            378
            
            
            
            1,407Net Cash Provided By Operating
      Activities
            
            
            4,178
            
            
            
            2,343CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of securities available for sale
            
            
            (71,170
            )
            
            
            (45,942
            )Proceeds
      from sales of securities available for sale
            
            
            13,640
            
            
            
            4,515Proceeds
      from maturities of securities available for sale
            
            
            18,582
            
            
            
            11,200Principal
      collected on mortgage-backed securities
            
            
            12,611
            
            
            
            3,063Net
      (increase) decrease in loans
            
            
            8,435
            
            
            
            (4,295
            )Purchase
      of Federal Home Loan Bank Stock
            
            
            -
            
            
            
            (34
            )Investment
      in cash surrender value of life insurance
            
            
            (4,200
            )
            
            
            -Proceeds
      from sale of foreclosed real estate
            
            
            788
            
            
            
            41Purchase
      of premises and equipment
            
            
            (258
            )
            
            
            (131
            )Net
      Cash Used In Investing Activities
            
            
            (21,572
            )
            
            
            (31,583
            )CASH
      FLOWS FROM FINANCING ACTIVITIESNet
      increase (decrease) in deposits
            
            
            13,782
            
            
            
            (16,299
            )Net
      decrease in federal funds purchased
            
            
            (1,180
            )
            
            
            -Net
      decrease in repurchase agreements
            
            
            (314
            )
            
            
            -Increase
      in Federal Home Loan Bank line of credit
            
            
            1,596
            
            
            
            -Proceeds
      from Federal Home Loan Bank advances
            
            
            92,439
            
            
            
            19,758Repayment
      of Federal Home Loan Bank advances
            
            
            (85,758
            )
            
            
            (9,050
            )Net
      decrease in advance payments byborrowers
      for taxes and insurance
            
            
            (173
            )
            
            
            (133
            )Purchase
      of treasury stock
            
            
            (1,329
            )
            
            
            -Purchase
      of common shares for restricted stock grants
            
            
            (1,388
            )
            
            
            -Dividends
      paid
            
            
            (193
            )
            
            
            -Proceeds
      from issuance of common stock
            
            
            -
            
            
            
            21,160Net Cash Provided By Financing
      Activities
            
            
            17,482
            
            
            
            15,436Net
      Increase (Decrease) in Cash and Cash Equivalents
            
            
            88
            
            
            
            (13,804
            )Cash
      and cash equivalents at beginning of period
            
            
            10,404
            
            
            
            21,379Cash
      and Cash Equivalents at End of Period
            
            $
            10,492
            
            
            $
            7,575





See notes
to consolidated financial statements.




-5-




FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





1.
            Presentation
      of Interim Information





First
Savings Financial Group, Inc. (“Company”), an Indiana corporation, was
incorporated in May 2008 to serve as the holding company for First Savings Bank,
F.S.B. (“Bank”), a federally-chartered savings bank.  On October 6,
2008, in accordance with a Plan of Conversion adopted by its board of directors
and approved by its members, the Bank converted from a mutual savings bank to a
stock savings bank and became the wholly-owned subsidiary of the
Company.  In connection with the conversion, the Company issued an
aggregate of 2,542,042 shares of common stock at an offering price of $10.00 per
share.  In addition, in connection with the conversion, First Savings
Charitable Foundation was formed, to which the Company contributed 110,000
shares of common stock and $100,000 in cash.  The Company’s common
stock began trading on the Nasdaq Capital Market on October 7, 2008 under the
symbol “FSFG”.





The Bank
has three-wholly owned subsidiaries: First Savings Investments, Inc., a Nevada
corporation that manages a securities portfolio, Southern Indiana Financial
Corporation, which sells non-deposit investment products, and FFCC, Inc., which
is currently inactive.





In the
opinion of management, the unaudited consolidated financial statements include
all adjustments considered necessary to present fairly the financial position as
of June 30, 2010, and the results of operations and the cash flows for the
three- and nine-month periods ended June 30, 2010 and 2009.  All of
these adjustments are of a normal, recurring nature.  Such adjustments
are the only adjustments included in the unaudited consolidated financial
statements.  Interim results are not necessarily indicative of results
for a full year.





The
accompanying unaudited consolidated financial statements and notes have been
prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”) for interim financial statements and are presented as permitted by the
instructions to Form 10-Q.  Accordingly, they do not contain certain
information included in the Company’s audited consolidated financial statements
and related notes for the year ended September 30, 2009 included in the Form
10-K.





The
unaudited consolidated financial statements include the accounts of the Company
and its subsidiaries.  All material intercompany balances and
transactions have been eliminated in consolidation.




2.
            Acquisition
      of Community First Bank





On
September 30, 2009, the Company acquired 100 percent of the outstanding common
shares of Community First Bank (“Community First”), a full service community
bank located in Corydon, Indiana, pursuant to an Agreement and Plan of
Reorganization dated April 28, 2009.  The acquisition was recorded
using the purchase method of accounting and was effective at the close of
business on September 30, 2009.  Accordingly, the results of
operations of Community First have been included in the Company’s results of
operations since the date of acquisition.  The acquisition expanded
the Company’s presence into Harrison, Crawford and Washington Counties,
Indiana.  The Company expects to benefit from growth in this market
area as well as from expansion of the banking services provided to the existing
customers of Community First.




-6-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





3.
            Supplemental
      Disclosure for Earnings Per Share





Basic
earnings per share are computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period.  Diluted earnings per share reflect the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity.  The Company had
no dilutive potential common shares outstanding during the three- and nine-month
periods ended June 30, 2010 and 2009.




Three Months
              Ended June 30,
            
            
            Nine Months
              Ended June 30,2010
            
            
            2009
            
            
            2010
            
            
            2009(Dollars
      in thousands, except per share data)Earnings:Net
      income (loss)
            
            $
            500
            
            
            $
            153
            
            
            $
            2,092
            
            
            $
            (212
            )Shares:Weighted
      average common shares outstanding
            
            
            2,211,353
            
            
            
            2,357,331
            
            
            
            2,272,182
            
            
            
            2,300,848Net income (loss) per common share,basic and
      diluted
            
            $
            0.23
            
            
            $
            0.06
            
            
            $
            0.92
            
            
            $
            (0.09
            )




-7-




FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




4.
            Comprehensive
      Income





Comprehensive income is defined as the
change in equity (net assets) of a business enterprise during a period from
transactions and other events and circumstances from non-owner
sources.  It includes all changes in equity during a period except
those resulting from investments by owners and distributions to
owners.  Comprehensive income for the Company includes net income and
other comprehensive income representing the net unrealized gains and losses on
securities available for sale and the Bank’s defined benefit pension plan (see
Note 7).  The following tables set forth the components of other
comprehensive income and the allocated tax amounts for the three- and nine-month
periods ended June 30, 2010 and 2009:





Three Months Ended
            
            
            Nine MonthsEndedJune 30,
            
            
            June 30,2010
            
            
            2009
            
            
            2010
            
            
            2009(In
      thousands)Unrealized
      gain on securities:Unrealized
      holding gainsarising during the period
            
            $
            1,210
            
            
            $
            70
            
            
            $
            2,685
            
            
            $
            329Income
      tax expense
            
            
            (479
            )
            
            
            (27
            )
            
            
            (1,063
            )
            
            
            (130
            )Net
      of tax amount
            
            
            731
            
            
            
            43
            
            
            
            1,622
            
            
            
            199Less:  reclassificationadjustment for realized gains includedin
      net income
            
            
            (34
            )
            
            
            -
            
            
            
            (34
            )
            
            
            -Income
      tax expense
            
            
            13
            
            
            
            -
            
            
            
            13
            
            
            
            -Net
      of tax amount
            
            
            (21
            )
            
            
            -
            
            
            
            (21
            )
            
            
            -710
            
            
            
            43
            
            
            
            1,601
            
            
            
            199Defined
      benefit pension plan:Reclassification
      adjustment – realized losson settlement of
      pension plan
            
            
            (708
            )
            
            
            -
            
            
            
            (708
            )
            
            
            -Income
      tax benefit
            
            
            280
            
            
            
            -
            
            
            
            280
            
            
            
            -(428
            )
            
            
            -
            
            
            
            (428
            )
            
            
            -Other
      comprehensive income, net of tax
            
            $
            282
            
            
            $
            43
            
            
            $
            1,173
            
            
            $
            199




5.
              Supplemental
      Disclosures of Cash Flow
Information





Nine Months
              Ended June 30,2010
            
            
            2009(In
      thousands)Cash
      payments for:Interest
            
            $
            6,313
            
            
            $
            3,439Taxes
            
            
            521
            
            
            
            177Transfers
      from loans to foreclosed real estate
            
            
            685
            
            
            
            963Proceeds
      from sales of foreclosed real estate financed through
      loans
            
            
            403
            
            
            
            89





-8-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





6.
            Fair
      Value Measurements and Disclosures about Fair Value of Financial
      Instruments





Effective
October 1, 2008, the Company adopted the provisions of Accounting Standards
Codification (“ASC”) Topic 820 (formerly Statement of Financial Accounting
Standards (“SFAS”) No. 157),
Fair Value Measurements, for financial assets and financial
liabilities.  This statement is definitional and disclosure oriented
and addresses how companies should approach measuring fair value when required
by GAAP; it does not create or modify any current GAAP requirements to apply
fair value accounting.  ASC Topic 820 prescribes various disclosures
about financial statement categories and amounts which are measured at fair
value, if such disclosures are not already specified elsewhere in
GAAP.





Fair
value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.  The standard establishes a fair value hierarchy
that prioritizes the use of inputs used in valuation methodologies into the
following three levels:





Level
      1:
              Inputs
      to the valuation methodology are quoted prices, unadjusted, for identical
      assets or liabilities in active markets.  A quoted market price
      in an active market provides the most reliable evidence of fair value and
      shall be used to measure fair value whenever
  available.





Level
      2:
              Inputs
      to the valuation methodology include quoted market prices for similar
      assets or liabilities in active markets; inputs to the valuation
      methodology include quoted market prices for identical or similar assets
      or liabilities in markets that are not active; or inputs to the valuation
      methodology that are derived principally from or can be corroborated by
      observable market data by correlation or other
  means.





Level
      3:
              Inputs
      to the valuation methodology are unobservable and significant to the fair
      value measurement.  Level 3 assets and liabilities include
      financial instruments whose value is determined using discounted cash flow
      methodologies, as well as instruments for which the determination of fair
      value requires significant management judgment or
    estimation.





A
description of the valuation methodologies used for instruments measured at fair
value, as well as the general classification of such instruments pursuant to the
valuation hierarchy, is set forth below.  These valuation
methodologies were applied to all of the Company’s financial assets carried at
fair value or the lower of cost or fair value.  The table below
presents the balances of financial assets measured at fair value on a recurring
and nonrecurring basis as of June 30, 2010.  The Company had no
liabilities measured at fair value as of June 30, 2010.





-9-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Carrying
      ValueLevel 1
            
            
            Level 2
            
            
            Level 3
            
            
            Total(In
      thousands)Assets
      Measured - Recurring BasisSecurities
      available for sale
            
            $
            75
            
            
            $
            103,894
            
            
            $
            -
            
            
            $
            103,969Interest
      rate cap contract
            
            
            -
            
            
            
            114
            
            
            
            -
            
            
            
            114Assets
      Measured - Nonrecurring BasisImpaired
      loans
            
            
            -
            
            
            
            3,617
            
            
            
            -
            
            
            
            3,617Loans
      held for sale
            
            
            -
            
            
            
            470
            
            
            
            -
            
            
            
            470Foreclosed
      real estate
            
            
            -
            
            
            
            1,198
            
            
            
            -
            
            
            
            1,198





Fair
value is based upon quoted market prices where available.  If quoted
market prices are not available, fair value is based on internally developed
models or obtained from third parties that primarily use, as inputs, observable
market-based parameters or a matrix pricing model that employs the Bond Market
Association’s standard calculations for cash flow and price/yield analysis and
observable market-based parameters.  Valuation adjustments may be made
to ensure that financial instruments are recorded at fair value, or the lower of
cost or fair value.  These adjustments may include unobservable
parameters.  Any such valuation adjustments have been applied
consistently over time.  The Company’s valuation methodologies may
produce a fair value calculation that may not be indicative of net realizable
value or reflective of future fair values.  While management believes
the Company’s valuation methodologies are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to
determine the fair value of certain financial instruments could result in a
different estimate of fair value at the reporting date.





Securities
Available for Sale.Securities classified
as available for sale are reported at fair value on a recurring
basis.  These securities are classified as Level 1 of the valuation
hierarchy where quoted market prices from reputable third-party brokers are
available in an active market.  If quoted market prices are not
available, the Company obtains fair value measurements from an independent
pricing service.  These securities are reported using Level 2 inputs
and the fair value measurements consider observable data that may include dealer
quotes, market spreads, cash flows, U.S. government and agency yield curves,
live trading levels, trade execution data, market consensus prepayment speeds,
credit information, and the security’s terms and conditions, among other
factors.  Changes in fair value of securities available for sale are
recorded in other comprehensive income, net of income tax effect.





Derivative
Financial Instruments.Derivative
financial instruments consist of an interest rate cap contract.  As
such, significant fair value inputs can generally be verified by counterparties
and do not involve significant management judgments (Level 2
inputs).




-10-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Impaired
Loans.  Impaired loans are carried at the present value of
estimated future cash flows using the loan's existing rate or the fair value of
collateral if the loan is collateral dependent.  Impaired loans are
evaluated and valued at the time the loan is identified as impaired at the lower
of cost or market value.  For collateral dependent impaired loans,
market value is measured based on the value of the collateral securing these
loans and is classified as Level 2 in the fair value
hierarchy.  Collateral may be real estate and/or business assets,
including equipment, inventory and/or accounts receivable, and its fair value is
generally determined based on real estate appraisals or other independent
evaluations by qualified professionals.  Impaired loans are reviewed
and evaluated on at least a quarterly basis for additional impairment and
adjusted accordingly, based on the same factors identified above.





Loans Held for
Sale.  Loans held for sale are carried at the lower of cost or
market value.  The portfolio is comprised of residential real estate
loans and fair value is based on specific prices of underlying contracts for
sale to investors.  These measurements are carried at Level
2.





Foreclosed Real
Estate Held for Sale.  Foreclosed real estate held for sale is
reported at the lower of cost or fair value less estimated costs to dispose of
the property using Level 2 inputs.  The fair values are determined by
real estate appraisals using valuation techniques consistent with the market
approach using recent sales of comparable properties.  In cases where
such inputs are unobservable, the balance is reflected within the Level 3
hierarchy.





There
were no transfers into or out of the Company's Level 3 financial assets for the
nine-month period ended June 30, 2010.  In addition, there were no
transfers into or out of Levels 1 and 2 of the fair value hierarchy during the
nine-month period ended June 30, 2010.





-11-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





GAAP
requires disclosure of fair value information about financial instruments for
interim reporting periods, whether or not recognized in the consolidated balance
sheet.  In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation
techniques.  Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows.  In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could not
be realized in immediate settlement of the instruments.  Accordingly,
the aggregate fair value amounts presented do not represent the underlying value
of the Company.  The estimated fair values of the Company's financial
instruments are as follows:





June 30, 2010
            
            
            September 30, 2009Carrying
            
            
            Fair
            
            
            Carrying
            
            
            FairAmount
            
            
            Value
            
            
            Amount
            
            
            Value(In
      thousands)Financial
      assets:Cash
      and due from banks
            
            $
            7,112
            
            
            $
            7,112
            
            
            $
            8,359
            
            
            $
            8,359Interest-bearing
      deposits in banks
            
            
            3,380
            
            
            
            3,380
            
            
            
            2,045
            
            
            
            2,045Securities
      available for sale
            
            
            103,969
            
            
            
            103,969
            
            
            
            72,580
            
            
            
            72,580Securities
      held to maturity
            
            
            4,294
            
            
            
            4,542
            
            
            
            6,782
            
            
            
            7,054Loans,
      net
            
            
            343,811
            
            
            
            355,023
            
            
            
            353,823
            
            
            
            360,157Mortgage
      loans held for sale
            
            
            470
            
            
            
            470
            
            
            
            317
            
            
            
            317Federal
      Home Loan Bank stock
            
            
            4,170
            
            
            
            4,170
            
            
            
            4,170
            
            
            
            4,170Accrued
      interest receivable
            
            
            2,480
            
            
            
            2,480
            
            
            
            2,100
            
            
            
            2,100Financial
      liabilities:Deposits
            
            
            364,598
            
            
            
            370,900
            
            
            
            350,816
            
            
            
            354,194Federal
      funds purchased
            
            
            -
            
            
            
            -
            
            
            
            1,180
            
            
            
            1,180Short-term
      repurchase agreements
            
            
            1,310
            
            
            
            1,310
            
            
            
            1,304
            
            
            
            1,304Long-term
      repurchase agreements
            
            
            15,615
            
            
            
            15,670
            
            
            
            15,935
            
            
            
            15,935Borrowings
      from Federal HomeLoan
      Bank
            
            
            64,050
            
            
            
            64,874
            
            
            
            55,773
            
            
            
            56,184Accrued
      interest payable
            
            
            461
            
            
            
            461
            
            
            
            516
            
            
            
            516Advance
      payments by borrowers for taxes and insurance
            
            
            168
            
            
            
            185
            
            
            
            341
            
            
            
            348Derivative
      financial instruments included in other
    assets:Interest
      rate cap
            
            
            114
            
            
            
            114
            
            
            
            202
            
            
            
            202Off-balance-sheet
      financial instruments:Asset
      related to commitments to extend credit
            
            
            -
            
            
            
            77
            
            
            
            -
            
            
            
            39







The
carrying amounts in the preceding table are included in the consolidated balance
sheets under the applicable captions.  The following methods and
assumptions were used to estimate the fair value of each class of financial
instrument for which it is practicable to estimate that value:





-12-




FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Cash
and Cash Equivalents





For cash
and short-term instruments, including cash and due from banks and
interest-bearing deposits with banks, the carrying amount is a reasonable
estimate of fair value.





Debt
and Equity Securities





For
marketable equity securities, the fair values are based on quoted market
prices.  For debt securities, the Company obtains fair value
measurements from an independent pricing service and the fair value measurements
consider observable data that may include dealer quotes, market spreads, cash
flows, U.S. government and agency yield curves, live trading levels, trade
execution data, market consensus prepayment speeds, credit information, and the
security’s terms and conditions, among other factors.  For Federal
Home Loan Bank  (FHLB) stock, a restricted equity security, the
carrying amount is a reasonable estimate of fair value because it is not
marketable.





Loans





The fair
value of loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar
credit ratings and terms.  The carrying amount of accrued interest
receivable approximates its fair value.





Deposits





The fair
value of demand and savings deposits and other transaction accounts is the
amount payable on demand at the balance sheet date.  The fair value of
fixed-maturity time deposits is estimated by discounting the future cash flows
using the rates currently offered for deposits with similar remaining
maturities.  The carrying amount of accrued interest payable
approximates its fair value.





Borrowed
Funds





Borrowed
funds include repurchase agreements and borrowings from the
FHLB.  Fair value for advances and long-term repurchase agreements is
estimated by discounting the future cash flows at current interest rates for
advances of similar maturities.  For federal funds purchased,
short-term repurchase agreements and FHLB line of credit borrowings, the
carrying value is a reasonable estimate of fair value.





Derivative
Financial Instruments





For
derivative financial instruments, the fair values generally represent an
estimate of the amount the Company would receive or pay upon termination of the
agreement at the reporting date, taking into account the current interest rates,
and exclusive of any accrued interest.





Off-Balance-Sheet
Financial Instruments





Commitments
to extend credit were evaluated and fair value was estimated using the fees
currently charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties.  For fixed-rate loan commitments, the fair value
estimate considers the difference between current interest rates and the
committed rates.





-13-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





7.
            Defined
      Benefit Plan





The Bank
sponsors a defined benefit pension plan (“Plan”) covering substantially all
employees.  Contributions are intended to provide not only for
benefits attributed to service to date but also for those expected to be earned
in the future.  The Bank’s funding policy is to contribute the larger
of the amount required to fully fund the Plan’s current liability or the amount
necessary to meet the funding requirements as defined by the Internal Revenue
Code.





Three Months
              Ended June
      30,
            
            
            Nine Months
              Ended  June 30,2010
            
            
            2009
            
            
            2010
            
            
            2009(In
      thousands)Net
      periodic benefit expense:Service
      cost
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Interest cost on projected benefit
      obligation
            
            
            -
            
            
            
            94
            
            
            
            149
            
            
            
            282Expected
      return on plan assets
            
            
            -
            
            
            
            (94
            )
            
            
            (72
            )
            
            
            (282
            )Amortization
      of unrecognized gain
            
            
            -
            
            
            
            -
            
            
            
            (2
            )
            
            
            -Net
      loss on settlement
            
            
            705
            
            
            
            -
            
            
            
            705
            
            
            
            -Net
      periodic benefit expense
            
            $
            705
            
            
            $
            -
            
            
            $
            780
            
            
            $
            -





The Bank
made no contributions to the Plan for the nine-month periods ended June 30, 2010
and 2009.  Effective June 30, 2008, the Bank curtailed the accrual of
benefits for active participants in the Plan.    As a result
of the curtailment, each active participant’s pension benefit was determined
based on the participant’s compensation and duration of employment as of June
30, 2008, and compensation and employment after that date was not taken into
account in determining pension benefits under the Plan.  In April
2010, the Bank received approval from the Internal Revenue Service to terminate
the Plan.  The termination of the Plan and the settlement of all Plan
obligations resulted in the allocation of excess Plan assets to the active Plan
participants.  As a result of the Plan termination and settlement, the
Company recognized a decrease in other assets of $1.5 million, a decrease in
other comprehensive income of $428,000 and a one-time charge to expense of
approximately $433,000, net of income tax effect, for the quarter ended June 30,
2010.





-14-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








8.
            Employee
      Stock Ownership Plan





On
October 6, 2008, the Company established a leveraged employee stock ownership
plan (“ESOP”) covering substantially all employees.  The ESOP trust
acquired 203,363 shares of Company common stock at a cost of $10.00 per share
financed by a term loan with the Company.  The employer loan and the
related interest income are not recognized in the consolidated financial
statements as the debt is serviced from Company
contributions.  Dividends payable on allocated shares are charged to
retained earnings and are satisfied by the allocation of cash dividends to
participant accounts.  Dividends payable on unallocated shares are not
considered dividends for financial reporting purposes.  Shares held by
the ESOP trust are allocated to participant accounts based on the ratio of the
current year principal and interest payments to the total of the current year’s
and future year’s principal and interest to be paid on the employer
loan.  Compensation expense is recognized based on the average fair
value of shares released for allocation to participant accounts during the year
with a corresponding credit to stockholders’ equity.  Compensation
expense recognized for the three- and nine-month periods ended June 30, 2010
amounted to $47,000 and $280,000, respectively.  Compensation expense
recognized for the three- and nine-month periods ended June 30, 2009 amounted to
$33,000 and $192,000, respectively.  Company common stock held by the
ESOP trust at June 30, 2010 was as follows:




Allocated
      shares
            
            
            49,626Unearned
      shares
            
            
            153,737Total
      ESOP shares
            
            
            203,363Fair
      value of unearned shares
            
            $
            2,000,118




9.
            Equity
      Incentive Plan





In
December 2009, the Company adopted the 2010 Equity Incentive Plan
(“Plan”).  The Company’s shareholders approved the Plan in February
2010.  The Plan provides for the award of stock options, restricted
shares and performance shares.  The aggregate number of shares of the
Company’s common stock available for issuance under the Plan may not exceed
355,885 shares.  The Company may grant both non-statutory and statutory
(i.e., incentive) stock options that may not have a term exceeding ten
years.  An award of a performance share is a grant of a right to receive
shares of the Company’s common stock contingent upon the achievement of specific
performance criteria or other objectives set at the grant date.  Awards
granted under the Plan may be granted either alone, in addition to, or in tandem
with any other award granted under the Plan.  The terms of the Plan include
a provision whereby all unearned options and shares become immediately
exercisable and fully vested upon a change in control.





-15-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




In April
2010, the Company funded a trust, administered by an independent trustee, which
acquired 101,681 common shares in the open market at a price per share of $13.60
for a total cost of $1.4 million.  These acquired common shares were
granted to directors, officers and key employees in the form of restricted
stock in May 2010 at a price per share of $13.25 for a total of $1.3
million.  The difference between the purchase price and grant price of
the common shares issued as restricted stock, totaling $41,000, was recognized
by the Company as a reduction of additional paid in capital.  The
vesting period of the restricted stock is five years beginning one year after
the date of grant of the awards.  Compensation expense is measured
based on the fair market value of the restricted stock at the grant date and is
recognized ratably over the period during which the shares are earned (the
vesting period).  Compensation expense related to restricted stock
recognized for both the three- and nine-month periods ended June 30, 2010
amounted to $34,000.  No compensation expense for restricted stock was
recognized for the comparable periods in 2009.  During the three- and
nine- month periods ended June 30, 2010, there were no restricted stock awards
forfeited.  At June 30, 2010, there were 101,681 outstanding and
unvested restricted stock awards.





In May
2010, the Company awarded 177,549 incentive and 76,655 non-statutory stock
options to directors, officers and key employees.  The options granted
vest ratably over five years and are exercisable in whole or in part for a
period up to ten years from the date of the grant.  Compensation
expense is measured based on the fair market value of the options at the grant
date and is recognized ratably over the period during which the shares are
earned (the vesting period).  The Binomial option pricing model was
used to determine the fair value of the options granted using the following
assumptions:





Expected
      dividend yield
            
            
            4.53
            %Risk-free
      interest rate
            
            
            2.82
            %Expected
      volatility
            
            
            30.00
            %Expected
      life of options
            
            7.5
      yearsWeighted
      average fair value at grant date
            
            $
            3.09





Compensation
expense related to stock options recognized for both the three- and nine-month
periods ended June 30, 2010 amounted to $20,000.  No compensation
expense for stock options was recognized for the comparable periods in
2009.  During the three- and nine- month periods ended June 30, 2010,
there were no stock options awards forfeited or exercised.  At June
30, 2010, there was $766,000 of unrecognized compensation expense related to
nonvested stock options, which will be recognized over the remaining vesting
period.




-16-





FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




10.
            Recent
      Accounting Pronouncements





The
following are summaries of recently issued accounting pronouncements that impact
the accounting and reporting practices of the Company:





In June
2009, the Financial Accounting Standards Board (“FASB”) issued two standards
which change the way entities account for securitizations and special-purpose
entities:  SFAS No. 166, Accounting for Transfers of
Financial Assets, (ASC Topic 860)and SFAS No. 167, Amendments to FASB Interpretation
No. 46(R), (ASC Topic 810).SFAS No. 166 is
a revision to SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, and
requires more information about transfers of financial assets, including
securitization transactions, and where entities have continuing exposure to the
risks related to transferred financial assets. This statement eliminates the
concept of a “qualifying special-purpose entity,” changes the requirements for
derecognizing financial assets, and requires additional
disclosures.  SFAS No. 167 is a revision to FASB Interpretation No. 46
(Revised December 2003), Consolidation of Variable Interest
Entities, and changes how a reporting entity determines when an entity
that is insufficiently capitalized or is not controlled through voting (or
similar rights) should be consolidated.  The determination of whether
a reporting entity is required to consolidate another entity is based on, among
other things, the other entity’s purpose and design and the reporting entity’s
ability to direct the activities of the other entity that most significantly
impact the other entity’s economic performance.  These new standards
require a number of new disclosures.  SFAS No. 167 requires a
reporting entity to provide additional disclosures about its involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement.  A reporting entity will be required to disclose how
its involvement with a variable interest entity affects the reporting entity’s
financial statements.  SFAS No. 166 enhances information reported to
users of financial statements by providing greater transparency about transfers
of financial assets and an entity’s continuing involvement in transferred
financial assets.  These statements are effective at the beginning of
a reporting entity’s first fiscal year beginning after November 15,
2009.  Early application is not permitted.  The adoption of
these statements is not expected to have a material effect on the Company's
consolidated financial position or results of operations.





In
January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and
Disclosures (Topic 820) – Improving Disclosures about Fair
Value Measurements. This Accounting Standards Update (“ASU”) provides
amendments to ASC Topic 820 to provide users of financial statements with
additional information regarding fair value.  New disclosures required
by the ASU include disclosures of significant transfers between Level 1 and
Level 2 and the reasons for such transfers, disclosure of the reasons for
transfers in or out of Level 3 and that significant transfers into Level 3 be
disclosed separately from significant transfers out of Level 3, and disclosure
of the valuation techniques used in connection with Level 2 and Level 3
valuations and the reason for any changes in valuation methods.  This
ASU will generally be effective for interim and annual periods beginning after
December 15, 2009.  However, disclosures of purchases, sales,
issuances, and settlements in the roll forward activity in Level 3 fair value
measurements will be effective for fiscal years beginning after December 15,
2010, and for interim periods within those fiscal years.  The adoption
of this ASU did not have a material effect on the Company’s consolidated
financial position or results of operations.





-17-




FIRST
SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





In
February 2010, the FASB issued ASU No. 2010-09, Subsequent Events (Topic 855) – Amendments to Certain Recognition
and Disclosure Requirements.  The amendments in the ASU remove
the requirement for companies that are subject to the periodic reporting
requirements of the Exchange Act to disclose a date through which subsequent
events have been evaluated in both issued and revised financial
statements.  Revised financial statements include financial statements
revised as a result of either correction of an error or retrospective
application of GAAP.  The FASB believes these amendments alleviate
potential conflicts with the SEC’s requirements.  All of the
amendments in the ASU were effective upon issuance, except for the use of the
issued date for conduit debt obligors, which will be effective for interim or
annual periods ending after June 15, 2010.  The adoption of this ASU
did not have a material effect on the Company’s consolidated financial position
or results of operations.





In April
2010, the FASB issued ASU No. 2010-18, Effect of a Loan Modification When
the Loan Is Part of a Pool That Is Accounted for as a Single Asset (Topic
310).  Under the amendments, modifications of loans that are
accounted for within pools under Subtopic 310-30 do not result in the removal of
those loans from the pool even if the modification of those loans would
otherwise be considered a troubled debt restructuring.  An entity will
continue to be required to consider whether the pool of assets in which the loan
is included is impaired if expected cash flows for the pool
change.  However, loans within the scope of Subtopic 310-30 that are
accounted for individually will continue to be subject to the troubled debt
restructuring accounting provisions.  The ASU is effective for
modifications of loans accounted for within pools under subtopic 310-30
occurring in the first interim or annual period ending after July 15,
2010.  The adoption of this ASU is not expected to have a material
impact on the Company’s consolidated financial position or results of
operations.





In July
2010, the FASB issued ASU No. 2010-20, Disclosures about the Credit Quality
of Financing Receivables and the Allowance for Credit
Losses.  The guidance requires additional disclosure to
facilitate financial statement users’ evaluation of the following: (1) the
nature of credit risk inherent in the entity’s loan portfolio, (2) how that risk
is analyzed and assessed in arriving at the allowance for loan losses, and (3)
the changes and reasons for those changes in the allowance for loan
losses.  For public companies, increased disclosures as of the end of
a reporting period are effective for periods ending on or after December 15,
2010.  Increased disclosures about activity that occurs during a
reporting period are effective for interim and annual reporting periods
beginning on or after December 15, 2010.  As the update relates to
financial statement disclosures, the adoption of this ASU is not expected to
have a material impact on the Company’s consolidated financial position or
results of operations.




-18-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Safe
Harbor Statement for Forward-Looking Statements





This
report may contain forward-looking statements within the meaning of the federal
securities laws.  These statements are not historical facts; rather
they are statements based on the Company’s current expectations regarding its
business strategies and their intended results and its future
performance.  Forward-looking statements are preceded by terms such as
“expects,” “believes,” “anticipates,” “intends” and similar
expressions.





Forward-looking
statements are not guarantees of future performance.  Numerous risks
and uncertainties could cause or contribute to the Company's actual results,
performance and achievements being materially different from those expressed or
implied by the forward-looking statements.  Factors that may cause or
contribute to these differences include, without limitation, general economic
conditions, including changes in market interest rates and changes in monetary
and fiscal policies of the federal government; legislative and regulatory
changes; the quality and composition of the loan and investment securities
portfolio; loan demand; deposit flows; competition; the ability to successfully
integrate the operations of Community First; and changes in accounting
principles and guidelines.  Additional factors that may affect our
results are discussed herein and in our Annual Report on Form 10-K for the year
ended September 30, 2009 under “Part II, Item 1A. Risk
Factors.”  These factors should be considered in evaluating the
forward-looking statements and undue reliance should not be placed on such
statements.  Except as required by applicable law or regulation, the
Company assumes no obligation and disclaims any obligation to update any
forward-looking statements.





Critical
Accounting Policies





During
the nine-month period ended June 30, 2010, there was no significant change in
the Company's critical accounting policies or the application of critical
accounting policies as disclosed in the Company's Annual Report on Form 10-K for
the year ended September 30, 2009.





Comparison
of Financial Condition at June 30, 2010 and September 30, 2009





Cash and Cash
Equivalents.  Cash and cash equivalents increased from $10.4
million at September 30, 2009 to $10.5 million at June 30, 2010, primarily due
to an increase of $1.3 million in interest-bearing deposits with banks, which
more than offset a decrease of $1.2 million in cash and due from
banks.





Loans.  Net
loans receivable decreased $10.0 million, from $353.8 million at September 30,
2009 to $343.8 million at June 30, 2010, primarily due to decreases in
residential permanent and construction loans of $9.7 million, consumer loans of
$4.8 million and commercial business loans of $1.3 million, partially offset by
increases in nonresidential permanent and construction mortgage loans of $2.4
million and multi-family residential mortgage loans of $2.6
million.  Management has continued to emphasize the origination of
commercial loans in 2010, given the increase in commercial lending personnel as
a result of the Community First acquisition.  In addition, the
decrease in residential mortgage loans is primarily due to loan payoffs that
have not been replaced by new originations as the Bank has increased its
secondary market mortgage loan sales activity.




-19-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Securities
Available for Sale.  Securities available for sale increased
$31.4 million from $72.6 million at September 30, 2009 to $104.0 million at June
30, 2010 due primarily to purchases of $71.2 million, partially offset by sales
of $13.2 million, maturities and calls of $18.6 million and principal repayments
of $10.6 million.  The increase in securities available for sale,
primarily in U.S. government agency and municipal securities, was funded by
increases in deposits and borrowings.





Securities Held
to Maturity.  Investment securities held-to-maturity decreased
$2.5 million from $6.8 million at September 30, 2009 to $4.3 million at June 30,
2010 due primarily to principal repayments on mortgage-backed
securities.





Cash Surrender
Value of Life Insurance.  Cash surrender value of life
insurance increased from $3.9 million at September 30, 2009 to $8.3 million at
June 30, 2010 primarily as the result of investments in bank-owned life
insurance of $1.2 million and $3.0 million in October 2009 and June 2010,
respectively.





Other
Assets.  Other assets decreased from $6.6 million at September
30, 2009 to $4.3 million at June 30, 2010 primarily as the result of the
termination of the defined benefit pension plan (see Note 7 to the consolidated
financial statements).





Deposits.  Total
deposits increased $13.8 million from $350.8 million at September 30, 2009 to
$364.6 million at June 30, 2010 primarily due to increases in
noninterest-bearing demand deposit accounts of $1.2 million, interest-bearing
demand deposit accounts of $7.5 million, savings deposit accounts of $2.3
million and certificates of deposit of $1.7 million during the
period.  The increase in certificates of deposit is due primarily to
$14.1 million of brokered certificates of deposit, partially offset by the $6.4
million that were closed as a result of the termination of the defined benefit
pension plan in April 2010 (see Note 7 to the consolidated financial statements)
and attrition of local customer certificates of deposit.  Management
determined that utilizing a certain level of brokered deposits with differing
maturities as a funding source alternative to local customer certificates of
deposit and FHLB advances was advantageous given the lower interest rate
environment for brokered funds.





Borrowings.  Borrowings
from FHLB increased $8.3 million from $55.8 million at September 30, 2009 to
$64.1 million at June 30, 2010.  Management has increased the level of
FHLB advances to take advantage of historically low interest rates, provide
short-term liquidity and provide funding for purchases of available for sale
securities.  Federal funds purchased decreased $1.2 million from
September 30, 2009 due to the full repayment of these borrowings as of June 30,
2010.





Stockholders’
Equity. Stockholders’ equity increased $684,000 from $52.9 million at
September 30, 2009 to $53.6 million at June 30, 2010.  The increase
was due primarily to $1.9 million of retained net earnings, a $1.2 million
increase in accumulated other comprehensive income due to net unrealized gains
on available for sale securities, and $259,000 for ESOP shares released during
the nine-month period.  These increases were partially offset by the
open market repurchases of $1.3 million of common stock recorded as treasury
stock and $1.3 million of common stock for the First Savings Financial Group,
Inc. 2010 Equity Incentive Plan (see Note 9 to the consolidated financial
statements).  During the quarter ended December 31, 2009, the Company
declared a special dividend of $0.08 per share, totaling $193,000, which was
paid to shareholders of record as of the close of business on January 4,
2010.





-20-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Results
of Operations for the Three Months Ended June 30, 2010 and 2009





Overview.  The
Company reported net income of $500,000, or $0.23 per diluted share, for the
three-month period ended June 30, 2010, compared to net income of $153,000, or
$0.06 per diluted share, for the same period in 2009.  The Company
recognized a one-time pretax charge of $705,000 in connection with the
termination and settlement of the Bank’s defined benefit pension plan during the
quarter ended June 30, 2010, which was terminated in order to eliminate future
cost obligations. Also, the Company recognized pretax charges of $281,000 and
$73,000 for data processing and professional fees, respectively, in connection
with the conversion of the Bank’s core operating system during the quarter ended
June 30, 2010. The purpose of the conversion is to integrate all twelve office
locations, provide additional product offerings to support future growth,
provide enhanced reporting and management tools, and reduce future data
processing expenses.





Net Interest
Income.  Net interest income increased $2.9 million, or 129.7%,
for the three months ended June 30, 2010 compared to the same period in
2009.  The increase is primarily due to an increase in the
tax-equivalent interest rate spread from 3.48% for 2009 to 4.47% for 2010, as
average interest-earnings assets increased $225.0 million and average
interest-bearing liabilities increased $230.0 million.  The increases
in the tax-equivalent interest rate spread, average interest-earning assets and
average interest-bearing liabilities are due primarily to the acquisition of
Community First.





Total interest income increased $3.3
million, or 99.9%, as a result of an increase in average interest-earning assets
of $225.0 million, or 99.6%, from $225.9 million for the three months ended June
30, 2009 to $450.9 million for the three months ended June 30,
2010.  The average tax equivalent yield on interest-earning assets was
5.84% for 2009 compared to 5.91% for 2010.  Average loans, investment
securities, FHLB stock and interest-bearing deposits with banks increased $169.7
million, $51.6 million, $2.8 million and $900,000, respectively.





Total
interest expense increased $415,000, or 37.7%, as a result of an increase in
average interest-bearing liabilities of $230.0 million from $179.8 million for
the three months ended June 30, 2009 to $409.8 million for the three months
ended June 30, 2010, which more than offset a decrease in the average cost of
funds from 2.36% in 2009 to 1.44% in 2010.  The average cost of
interest-bearing liabilities decreased for 2010 primarily as a result of lower
market interest rates as compared to 2009, the repricing of certificates of
deposit at lower market interest rates as they matured, the utilization of
lower-cost FHLB advances and brokered deposits as alternative sources of funding
and the assumption of lower cost liabilities of Community First.





Provision for
Loan Losses.  The provision for loan losses was $300,000 for
the three months ended June 30, 2010 compared to $272,000 for the same period in
2009.  The increase in the provision for loan losses is primarily due
to an increase in nonperforming loans and net chargeoffs during the quarter
ended June 30, 2010 as compared to the same period in 2009.




-21-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Gross
loans receivable increased $170.2 million from $179.2 million at June 30, 2009
to $349.4 million at June 30, 2010, primarily due to the acquisition of
Community First.  Residential mortgage, nonresidential mortgage,
commercial business, construction, and automobile loans increased most
significantly, by $68.8 million, $30.2 million, $18.4 million, $17.4 million and
$12.3 million, respectively, when comparing the two periods.





Nonperforming
loans increased $2.2 million from $3.0 million at June 30, 2009 to $5.2 million
at June 30, 2010, of which $2.2 million were acquired in the acquisition of
Community First, including two relationships totaling $929,000 that are secured
by commercial real estate.





The
balance of nonperforming loans at June 30, 2010 includes nonaccrual loans of
$4.6 million and loans totaling $626,000 that are over 90 days past due, but
still accruing interest.  These loans are still accruing interest
because the estimated value of the collateral and collection efforts are deemed
sufficient to ensure their full recovery.  The balance of nonaccrual
loans at June 30, 2010 consists of commercial business loans ($619,000),
consumer loans ($172,000), residential mortgage loans ($2.4 million),
nonresidential mortgage loans ($929,000), and land and land development loans
($377,000).  Nonaccrual residential mortgage loans totaling $2.4
million include loans secured by owner occupied, one-to-four family residences
($1.7 million), non-owner occupied, one-to-four family investment properties
($513,000) and speculative construction homes ($235,000).  The
nonaccrual non-owner occupied, residential mortgage loans are spread across four
unrelated borrowing relationships.





Net
charge-offs were $391,000 for the three months ended June 30, 2010 compared to
net charge-offs of $207,000 for the same period in 2009.





The
allowance for loan losses was $4.2 million at June 30, 2010 compared to $3.7
million at September 30, 2009 and $1.7 million at June 30,
2009.  Management has deemed these amounts as adequate on those dates
based on its best estimate of probable known and inherent loan
losses.  The consistent application of management’s allowance for loan
losses methodology resulted in an increase in the level of the allowance for
loan losses consistent with the increase in the gross loan portfolio and
nonperforming loans and the change in overall economic conditions.





Noninterest
Income.  Noninterest income increased $448,000 to $739,000 for
the three months ended June 30, 2010 as compared to $291,000 for the same period
in 2009. The increase was primarily due to increases in service charges on
deposit accounts of $255,000, commission income of $55,000 and other income of
$69,000, and net gains on sales of investment securities of $34,000 recognized
during 2010.  The increases in services charges on deposits and other
income, which relate primarily to ATM surcharge and EFT interchange fee income,
is primarily a result of acquired Community First deposit accounts.





-22-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Noninterest
Expense.  Noninterest expenses increased $2.8 million to $4.9
million for the three months ended June 30, 2010 as compared to $2.1 million the
same period in 2009. Compensation and benefits expense increased $1.7 million
due primarily to additional personnel resulting from the Community First
acquisition and the $705,000 termination cost of the defined benefit pension
plan (see Note 7 to the consolidated financial statements). Occupancy and
equipment, data processing and other operating expenses increased $348,000,
$360,000 and $333,000, respectively, when comparing the two periods primarily as
a result of the Community First acquisition.  The increase in data
processing expense included the aforementioned $281,000 of charges associated
with the conversion of the core operating system and the other operating expense
increase included $73,000 of amortization of the acquired core deposit
intangible.





Income Tax
Expense.  The Company recognized income tax expense of $83,000
for the three months ended June 30, 2010, for an effective tax rate of 14.2%,
compared to an income tax benefit of $2,000 for the same period in
2009.  The low effective tax rate for the three months ended June 30,
2010 was due primarily to an increase in tax exempt income and a decrease in
income before taxes for the period.





Results
of Operations for the Nine Months Ended June 30, 2010 and 2009





Overview.  The
Company reported net income of $2.1 million, or $0.92 per diluted share, for the
nine-month period ended June 30, 2010, compared to a net loss of $212,000, or
$0.09 per share, for the same period in 2009.  The Company recognized
the aforementioned one-time pretax charge of $705,000 in connection with the
termination and settlement of the Bank’s defined benefit pension plan and pretax
charges of $564,000 and $121,000 for data processing and professional fees,
respectively, in connection with the conversion of the Bank’s core operating
system during the nine months ended June 30, 2010.  The primary factor
for the net loss in 2009 was the $1.2 million ($731,000, net of tax) one-time
contribution to First Savings Charitable Foundation in October
2008.





Net Interest
Income.  Net interest income increased $8.9 million, or 142.9%,
for the nine months ended June 30, 2010 compared to the same period in
2009.  The increase is primarily due to an increase in the
tax-equivalent interest rate spread from 3.26% for 2009 to 4.42% for 2010, as
average interest-earnings assets increased $229.6 million and average
interest-bearing liabilities increased $234.8 million.  The increases
in the tax-equivalent interest rate spread, average interest-earning assets and
average interest-bearing liabilities are due primarily to the acquisition of
Community First.





Total interest income increased $10.1
million, or 105.3%, as a result of an increase in average interest-earning
assets of $229.6 million, or 105.4%, from $217.9 million for the nine months
ended June 30, 2009 to $447.5 million for the nine months ended June 30,
2010.  The average tax equivalent yield on interest-earning assets was
5.90% for 2009 compared to 5.94% for 2010.  Average loans, investment
securities, FHLB stock and interest-bearing deposits with banks increased $173.8
million, $53.7 million, and $2.8 million, respectively, while average
interest-bearing deposits with banks decreased $809,000.




-23-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Total
interest expense increased $1.2 million, or 36.1%, as a result of an increase in
average interest-bearing liabilities of $234.8 million from $172.9 million for
the nine months ended June 30, 2009 to $407.7 million for the nine months ended
June 30, 2010, which more than offset a decrease in the average cost of funds
from 2.64% in 2009 to 1.52% in 2010.  The average cost of
interest-bearing liabilities decreased for 2010 primarily as a result of lower
market interest rates as compared to 2009, the repricing of certificates of
deposit at lower market interest rates as they matured, the utilization of
lower-cost FHLB advances and brokered deposits as a source of funding and the
assumption of lower cost liabilities of Community First.





Provision for
Loan Losses.  The provision for loan losses was $1.2 million
for the nine months ended June 30, 2010 compared to $400,000 for the same period
in 2009.  As discussed above, the primary factor for the increased
provision for loan losses for 2010 was an increase in nonperforming loans and
charge-offs during the period ended June 30, 2010 as compared to the same period
in 2009.  Net charge-offs were $744,000 for the nine months ended June
30, 2010 compared to $430,000 for the same period in 2009.





Noninterest
Income.  Noninterest income increased $1.2 million to $2.0
million for the nine months ended June 30, 2010 as compared to $826,000 for the
same period in 2009. The increase was primarily due to increases in service
charges on deposit accounts of $757,000, commission income of $125,000 and other
income of $176,000 primarily as a result of the Community First
acquisition.





Noninterest
Expense.  Noninterest expenses increased $5.8 million to $12.9
million for the nine months ended June 30, 2010 as compared to $7.1 million for
the same period in 2009.  Compensation and benefits expense increased
$3.9 million primarily due to additional personnel resulting from the Community
First acquisition and the termination of the defined benefit pension
plan.  Occupancy and equipment expense and FDIC insurance premiums
increased $969,000 and $239,000, respectively, when comparing the two periods,
primarily as a result of the Community First acquisition and an industry-wide
increase in FDIC insurance premiums.  Data processing expenses
increased $786,000 primarily as a result of the Community First acquisition and
one-time charges of $564,000 associated with the conversion of the core
operating system.  Professional fees increased $210,000, primarily as
the result of fees associated with the conversion of the core operating system
totaling $121,000 and $43,000 of consulting fees related to Sarbanes-Oxley
compliance.  Other operating expense increased $841,000, when
comparing the two periods, also primarily as a result of the Community First
acquisition, including amortization of the acquired core deposit intangible of
$220,000.  Charitable contributions decreased $1.2 million when
comparing the two periods due to the $1.2 million one-time contribution to the
First Savings Charitable Foundation during October 2008.





Income Tax
Expense.  The Company recognized income tax expense of $742,000
for the nine months ended June 30, 2010, for an effective tax rate of 26.2%,
compared to an income tax benefit of $342,000 for the same period in 2009. The
tax benefit for 2009 was due primarily to increased deferred tax assets related
to the temporary timing difference generated by the charitable contribution to
the First Savings Charitable Foundation.




-24-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Liquidity
and Capital Resources





Liquidity
Management.  Liquidity
is the ability to meet current and future financial obligations of a short-term
nature.  The Bank’s primary sources of funds are customer deposits,
proceeds from loan repayments, maturing securities and FHLB
advances.  While loan repayments and maturities are a predictable
source of funds, deposit flows and mortgage prepayments are greatly influenced
by market interest rates, general economic conditions and
competition.  At June 30, 2010, the Bank had cash and cash equivalents
of $10.5 million and securities available-for-sale with a fair value of $104.0
million.  If the Bank requires funds beyond its ability to generate
them internally, it has additional borrowing capacity with the FHLB and
additional collateral eligible for repurchase agreements.





The
Bank’s primary investing activity is the origination of one-to-four family
mortgage loans and, to a lesser extent, consumer, multi-family, commercial real
estate, commercial business and residential construction loans.  The
Bank also invests in U.S. Government and agency securities and mortgage-backed
securities and collateralized mortgage obligations issued by U.S. Government
agencies.





The Bank
must maintain an adequate level of liquidity to ensure the availability of
sufficient funds to support loan growth and deposit withdrawals, to satisfy
financial commitments and to take advantage of investment
opportunities.  Historically, the Bank has been able to retain a
significant amount of its deposits as they mature.





The
Company is a separate legal entity from the Bank and must provide for its own
liquidity to pay its operating expenses and other financial obligations, to pay
any dividends and to repurchase any of its outstanding common
stock.  The Company’s primary source of income is dividends received
from the Bank.  The amount of dividends that the Bank may declare and
pay to the Company in any calendar year, without the receipt of prior approval
from the Office of Thrift Supervision (“OTS”) but with prior notice to OTS,
cannot exceed net income for that year to date plus retained net income (as
defined) for the preceding two calendar years.  At June 30, 2010, the
Company had liquid assets of $3.7 million.





Capital
Management.  The Bank is required to maintain specific amounts
of capital pursuant to OTS regulatory requirements.  As of June 30,
2010, the Bank was in compliance with all regulatory capital requirements that
were effective as of such date, with tangible, core and risk-based capital
ratios of 7.78%, 7.78% and 12.06%, respectively.  The regulatory
requirements at that date were 1.5%, 3.0% and 8.0%, respectively.  At
June 30, 2010, the Bank was considered “well-capitalized” under applicable
regulatory guidelines.





-25-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 2





MANAGEMENT’S
DISCUSSION AND


ANALYSIS
OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Off-Balance
Sheet Arrangements





In the
normal course of operations, the Company engages in a variety of financial
transactions that, in accordance with GAAP, are not recorded on the Company's
financial statements.  These transactions involve, to varying degrees,
elements of credit, interest rate and liquidity risk.  Such
transactions are primarily used to manage customers’ requests for funding and
take the form of loan commitments and letters of credit.  A further
presentation of the Company’s off-balance sheet arrangements is presented in the
Company’s Annual Report on Form 10-K for the year ended September 30,
2009.





For the
nine months ended June 30, 2010, the Company did not engage in any off-balance
sheet transactions reasonably likely to have a material effect on the Company's
financial condition, results of operations or cash flows.





-26-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I – ITEM 3




QUANTITATIVE
AND QUALITATIVE DISCLOSURES


ABOUT
MARKET RISK





Qualitative Aspects of Market
Risk.  The Bank’s principal financial objective is to achieve
long-term profitability while reducing its exposure to fluctuating market
interest rates. The Bank has sought to reduce the exposure of its earnings to
changes in market interest rates by attempting to manage the mismatch between
asset and liability maturities and interest rates. In order to reduce the
exposure to interest rate fluctuations, the Bank has developed strategies to
manage its liquidity, shorten its effective maturities of certain
interest-earning assets and decrease the interest rate sensitivity of its asset
base. Management has sought to decrease the average maturity of its assets by
emphasizing the origination of short-term residential mortgage, commercial
mortgage and commercial business loans, all of which are retained by the Bank
for its portfolio. The Bank relies on retail deposits as its primary source of
funds. Management believes the primary use of retail deposits, complimented with
a modest allocation of brokered deposits and FHLB borrowings, reduce the effects
of interest rate fluctuations because they generally represent a more stable
source of funds.





Quantitative Aspects of Market
Risk.  The Bank does not maintain a trading account for any
class of financial instrument nor does the Bank engage in hedging activities or
purchase high-risk derivative instruments. Furthermore, the Bank is not subject
to foreign currency exchange rate risk or commodity price risk.





The Bank
uses interest rate sensitivity analysis to measure its interest rate risk by
computing changes in net portfolio value (“NPV”) of its cash flows from assets,
liabilities and off-balance sheet items in the event of a range of assumed
changes in market interest rates. NPV represents the market value of portfolio
equity and is equal to the market value of assets minus the market value of
liabilities, with adjustments made for off-balance sheet items. This analysis
assesses the risk of loss in market risk sensitive instruments in the event of a
sudden and sustained 100 to 300 basis point increase or a sudden and sustained
100 basis point decrease in market interest rates with no effect given to any
steps that management might take to counter the effect of that interest rate
movement. Using data compiled by the OTS, the Bank receives a report that
measures interest rate risk by modeling the change in NPV over a variety of
interest rate scenarios.





-27-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I – ITEM 3





QUANTITATIVE
AND QUALITATIVE DISCLOSURES


ABOUT
MARKET RISK





The
following table is provided by the OTS and sets forth the change in the Bank’s
NPV at March 31, 2010 based on OTS assumptions that would occur in the event of
an immediate change in interest rates, with no effect given to any steps that
management might take to counteract that change. Given the timing of the release
of this information by the OTS, information as of June 30, 2010 is unavailable
for inclusion in this report.




At
      March 31, 2010Net
      Portfolio Value
            
            
            Net
      Portfolio Value as aDollar
            
            
            Dollar
            
            
            Percent
            
            
            Percent
      of Present Value of AssetsChange
      in Rates
            
            
            Amount
            
            
            Change
            
            
            Change
            
            
            NPV
      Ratio
            
            
            Change(Dollars
      in thousands)300bp
            
            
            $
            45,315
            
            
            $
            (10,553
            )
            
            
            (19
            )%
            
            
            9.27
            %
            
            
            (169
            )bp200bp
            
            
            
            50,529
            
            
            
            (5,339
            )
            
            
            (10
            )
            
            
            10.16
            
            
            
            (80
            )bp100bp
            
            
            
            54,592
            
            
            
            (1,276
            )
            
            
            (2
            )
            
            
            10.82
            
            
            
            (14
            )bpStatic
            
            
            
            55,868
            
            
            
            -
            
            
            
            -
            
            
            
            10.96
            
            
            
            -
            bp(100)bp
            
            
            
            55,964
            
            
            
            96
            
            
            
            -
            
            
            
            10.90
            
            
            
            (6
            )bp





The
preceding table indicates that the Bank’s NPV would be expected to decrease in
the event of a sudden and sustained 100 to 300 basis point increase in
prevailing interest rates and increase slightly in the event of a sudden and
sustained decrease of 100 basis points in rates.  The expected
decrease in the Bank’s NPV given a larger increase in rates is primarily
attributable to the relatively high percentage of fixed-rate loans in the Bank’s
loan portfolio.  At June 30, 2010, approximately 69.5% of the loan
portfolio consisted of fixed-rate loans.





Certain
assumptions utilized by the OTS in assessing the interest rate risk of savings
associations within its region were utilized in preparing the preceding tables.
These assumptions relate to interest rates, loan prepayment rates, deposit decay
rates and the market values of certain assets under differing interest rate
scenarios, among others.





As with
any method of measuring interest rate risk, certain shortcomings are inherent in
the method of analysis presented in the foregoing table. For example, although
certain assets and liabilities may have similar maturities or periods to
repricing, they may react in different degrees to changes in market interest
rates. Also, the interest rates on certain types of assets and liabilities may
fluctuate in advance of changes in market interest rates, while interest rates
on other types may lag behind changes in market rates. Additionally, certain
assets, such as adjustable-rate mortgage loans, have features that restrict
changes in interest rates on a short-term basis and over the life of the asset.
Further, in the event of a change in interest rates, expected rates of
prepayments on loans and early withdrawals from certificates of deposit could
deviate significantly from those assumed in calculating the table.





-28-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
I - ITEM 4





CONTROLS
AND PROCEDURES





Controls
and Procedures





The
Company’s management, including the Company’s principal executive officer and
the Company’s principal financial officer, have evaluated the effectiveness of
the Company’s “disclosure controls and procedures,” as such term is defined in
Rule 13a-15(e) of the Securities Exchange Act of 1934, as
amended.  Based on their evaluation, the principal executive officer
and the principal financial officer concluded that, as of the end of the period
covered by this report, the Company’s disclosure controls and procedures were
effective for the purpose of ensuring that information required to be disclosed
in reports that the Company files or submits under the Exchange Act with the SEC
(1) is recorded, processed, summarized, and reported within the time periods
specified in the SEC’s Rules and Forms and (2) is accumulated and communicated
to the Company’s management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.





During
the quarter ended June 30, 2010, there were no changes in the Company's internal
control over financial reporting that materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial
reporting.




-29-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
II





OTHER
INFORMATION





Item
      1.
            Legal
      Proceedings





The
Company is not a party to any legal proceedings.  Periodically, there
have been various claims and lawsuits involving the Bank, mainly as a plaintiff,
such as claims to enforce liens, condemnation proceedings on properties in which
the Bank holds security interests, claims involving the making and servicing of
real property loans and other issues incident to the Bank’s
business.  The Bank is not a party to any pending legal proceedings
that it believes would have a material adverse affect on its financial condition
or operations.








Item
      1A.
              Risk
      Factors





In
addition to the other information set forth in this report, you should carefully
consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual
Report on Form 10-K for the year ended September 30, 2009 which could materially
affect our business, financial condition or future results. Except as set forth
below, there have been no material changes to the risk factors described in our
Annual Report on Form 10-K.  However,  these are not the
only risks that we face.  Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial also may
materially adversely affect our business, financial condition and/or operating
results.




Recently
enacted regulatory reform legislation may have a material impact on our
operations.




On July
21, 2010, the President signed into law The Dodd-Frank Wall Street Reform and
Consumer Protection Act (the “Dodd-Frank Act”).  The Dodd-Frank Act
restructures the regulation of depository institutions.  Under the
Dodd-Frank Act, the Office of Thrift Supervision will be merged into the Office
of the Comptroller of the Currency, which regulates national
banks.  Savings and loan holding companies will be regulated by the
Federal Reserve Board.  The Dodd-Frank Act contains various provisions
designed to enhance the regulation of depository institutions and prevent the
recurrence of a financial crisis such as occurred in 2008 and
2009.  Also included is the creation of a new federal agency to
administer and enforce consumer and fair lending laws, a function that is now
performed by the depository institution regulators.  The federal
preemption of state laws currently accorded federally chartered depository
institutions will be reduced as well.  The Dodd-Frank Act also will
impose consolidated capital requirements on savings and loan holding companies
effective in five years, which will limit our ability to borrow at the holding
company and invest the proceeds from such borrowings as capital in the Bank that
could be leveraged to support additional growth.  The full impact of
the Dodd-Frank Act on our business and operations will not be known for years
until regulations implementing the statute are written and
adopted.  The Dodd-Frank Act may have a material impact on our
operations, particularly through increased compliance costs resulting from
possible future consumer and fair lending regulations.




-30-





FIRST
SAVINGS FINANCIAL GROUP, INC.


PART
II





OTHER
INFORMATION




Item
      2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds





None.




Item3.
            Defaults
      upon Senior Securities





Not
applicable.




Item 4.
            Reserved




Item
      5.
            Other
      Information





None.




Item
      6.
            Exhibits




3.1
              
              Articles
      of Incorporation of First Savings Financial Group, Inc.
  (1)3.2
              
              Bylaws
      of First Savings Financial Group, Inc. (1)31.1
              
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive
    Officer31.2
              
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Financial
    Officer32.1
              
              Section
      1350 Certification of Chief Executive Officer32.2
              
              Section
      1350 Certification of Chief Financial
Officer







(1)
            Incorporated
      herein by reference to the exhibits to the Company’s Registration
      Statement on Form S-1 (File No. 333-151636), as amended, initially filed
      with the Securities and Exchange Commission on June 13,
    2008.




-31-





SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.






FIRST
      SAVINGS FINANCIAL GROUP, INC.
                (Registrant)DatedAugust 13,
      2010
              BY:
              /s/
      Larry W. MyersLarry
      W. MyersPresident
      and Chief Executive Officer




DatedAugust 13,
      2010
              BY:
              /s/ Anthony A. SchoenAnthony
      A. SchoenChief
      Financial Officer




-32-